Friday, February 20, 1998

Report says Texans not saving enough

By MICHAEL HOLMES / Associated Press Writer

AUSTIN (AP) -- A new state report says Texans are lagging behind in saving money for retirement, education, home purchases and other major events in their lives.

The latest issue of Fiscal Notes, published by the state comptroller's office, Thursday reported that many Texas households fit the profile of non-savers.

In particular, Texans appear unlikely to hold such assets as stocks or investment real estate associated with retirement savings, the report said.

Because of the state's younger-than-average population, the report says many Texas are behind what it calls the "entitlement curve" for the elderly.

By the time today's 33-year-old Texans are ready to retire, they may have to wait an extra two years to receive Social Security payments, the report said.

"In all likelihood, Social Security will not be sufficient for retirement in the future," Comptroller John Sharp said.

"But, long before these families reach retirement age, they will be facing other decisions, such as buying a first car, a first home or sending a first child to college," he said.

Sharp said Texans need to weigh the costs and benefits of saving compared to spending. "If Texas families are to be financially secure and independent in the future, they must start working toward that goal today."

According to the report, Texas' relatively young population also means workers contribute disproportionately to the Social Security system through payroll taxes.

In addition, the state's per-capita income is below the national average, so a higher share of wages are paid to Social Security, yet retirees receive lower monthly Social Security payments than the U.S. average.

The report said Texas workers are less likely than other Americans to be covered by employee pension plans. U.S. Department of Labor figures showed only 45 percent of full-time workers in Texas covered by pensions.

Savings habits are closely linked with education levels, the comptroller's office reported. Texas has more than 2.5 million high school dropouts, the second-highest number in the nation.

Sharp said he believes more attention needs to be focused on lower-income workers.

He noted that women and minorities especially need investment education, with many in those groups being too conservative to achieve the return they need for retirement.